On July 31, 2019, Massachusetts Governor Baker signed House Bill 4000 into law. This bill, among other things, addresses the sales and use tax obligations of marketplace facilitators and remote sellers. Particularly, the bill provides that, effective October 1, 2019, remote retailers are required to collect and remit sales and use taxes if the remote retailer has over $100,000 in Massachusetts sales in the prior or current taxable year. Recall, in a regulation adopted October 1, 2017, the Massachusetts Department of Revenue required remote retailers to collect and remit sales and use tax if the retailer had the requisite “in-state physical presence,” which was generally defined with reference to having apps and cookies in the state or having relationships with in-state content distribution networks. The remote retailer was also required to meet a sales threshold of more than $500,000 in Massachusetts sales from transactions completed over the Internet and delivery into Massachusetts of 100 or more transactions. The Department issued guidance post-Wayfair stating that the decision did not have an impact on the preexisting regulation.
In addition to revising the collection requirements for remote retailers, House Bill 4000 also requires marketplace facilitators (as broadly defined) to collect and remit effective October 1, 2019 if, in the prior or current taxable year, the marketplace facilitator had over $100,000 in Massachusetts[SM1] sales. The threshold is measured by sales made directly and those facilitated on behalf of a marketplace seller.
House Bill 4000 allows a marketplace facilitator to seek a waiver from the collection and remittance requirements if certain conditions are met. A special waiver also exists for sales of telecommunication services. If a waiver is granted, the marketplace seller is responsible for collecting and remitting the applicable tax. Finally, the bill contains a relief provision for marketplace facilitators that reasonably rely on incorrect or invalid information provided by the marketplace seller. Please stay tuned to TWIST for additional marketplace facilitator updates.